A senior Federal Reserve official said Monday the U.S. central bank is likely to buy all of the bonds it has said it will by June 30 and reinvest securities for a while after that before beginning to tighten financial conditions.
"There doesn't seem to be a lot of support, from what I can tell, to stop the program," Christopher Waller, research director at the St. Louis Federal Reserve Bank, told Reuters in an interview.
"It would be reasonable to keep the balance sheet constant for at least a meeting (after June 30) and see how things are going," he said.
To do so, the Fed would have to continue its current policy of reinvesting the proceeds of securities that have matured or otherwise been paid off.
Fed officials have expressed a range of sentiments for and against keeping the central bank's $600 billion bond-buying program going in light of a recovery that appears to be steadily if unspectacularly gaining ground.
Waller's remarks suggest that a proposal by his boss, St. Louis Fed President James Bullard, for the central bank to stop $100 billion short of the mark is unlikely to come to fruition.
While sentiment seems lacking to curtail the program, even some of the most dovish Fed officials have lost appetite for pushing for further easing past June.
THERE'S SOMETHING ABOUT 600
Chicago Fed President Charles Evans, seen as one of the strongest backers of aggressive growth-boosting initiatives, said Monday the central bank's bond-buying program should be enough to get the economy back on its feet.
"We've seen pretty good growth and the employment numbers are improving. It's quite likely that 600 could be about the right number," Evans told CNBC in an interview.
Waller said the next debate likely revolves around whether the Fed should actively shrink its vastly expanded securities holdings first through asset sales or by raising official interest rates when it is ready to tighten financial conditions.
"I don't think you're going see anything happening with the balance sheet immediately, and it'll be pause, take stock, look around, come to a decision about ... when should we be selling and do we do it before we raise rates or not," he said.
The Fed cut overnight rates to near zero in December 2008 to try to pull the economy out of a deep recession and then bought $1.7 trillion in mortgage-related and government debt in a further effort to spur growth.
When the fledgling recovery showed signs of flagging last year, the Fed launched a fresh $600 billion bond-buying spree to provide an additional boost.
The economy has strengthened considerably since a year ago, when the sovereign debt crisis in Europe slowed the U.S. economic recovery and made another round of monetary easing necessary, Waller said.
In the current environment, it would take a severe setback for the U.S. central bank to consider any further monetary support, he said.
"Given how the data's been coming in, I would be very surprised to see a lot of support for a third round of this," Waller said. "I think it would take some significant softening or downturns of the data."
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